Marston's Share Discussion Threads

[luderitz] 25/1/2020 00:56

I used to like what Marston pubs had to offer but recently not so and have not owned any shares for a few years now.

As said on here people’s eating habits have changed somewhat so staying out and on the fence until further notice with these.

A takeover? Who knows but good luck to any holders who gain from one.

[redartbmud] 24/1/2020 18:59

Food led pubcos are competing against the takeaway market, as well as the pizza parlours and the like. They offer a very similar price range. All of them, including rival pub chains are regularly giving significant discounts 25/30/40/50% discount deals to attract punters, who are not crossing the threshold as regularly as they were several months ago.

[loganair] 24/1/2020 18:44

Investors have not taken kindly to the trading statement and appear to have priced in a 2020 loss. Although revenues have been growing each year, costs have been eating more and more of them away. Management thinks that the market will grow in 2020, as consumers are enjoying low unemployment and wage growth.

But it is costs, not revenues that have been the problem. Debt reduction will help bring financing costs down, but there does not seem to be a dedicated plan to reduce operational costs. Perhaps selling high-cost pubs and buying fewer, but more profitable, new ones will kill two birds with one stone.

If 2020 has fair weather, revenues will get a further boost (there is a good correlation between sun and income) but on balance 2020 looks to be more rain then shine for Marston’s.

The dividend yield is around 7% at the moment but there is an appreciable risk of seeing that fall in the future. Investors will run for the exits if dividends are cut.

If management can get a hold on costs, reduce debt, the economy holds up, and the sun shines, then this stock could do well. That’s a lot of “ifs”.

[loganair] 24/1/2020 18:38

Analyst Mark Brumby at Langton Capital said pub prices were likely to have to rise, with the gross impact of the new minimum wage to be doubled in the next full year, though the company will have longer to mitigate the impact.

He said the best estimates at this stage would be that "by taking a little price, tighter labour scheduling and efficiencies, MARS may be able to mitigate up to a half of the gross impact in FY21. But it’s not as though the company hasn’t been doing much of this already and, as cost savings etc are finite, it is likely that price rises could feature more prominently than they have in the recent past.

"Here MARS will need to be measured and cautious. It will not be alone. For some operators, for example the casual diners, this may be a very serious problem."

Broker Peel Hunt said it was cutting its forecasts for adjusted profit before tax by an average of 4% to reflect the wage hikes and additional disposal activity.

"This combined with faster debt reduction still equates to 28% equity value creation (down from 32%) over the next two years, including dividends."

[redartbmud] 24/1/2020 18:37

MRF

Thank goodness for a rational comment - £1.6bn of debt!!
They are trying to pay down £200m over 4 years.
They can't afford to build any new pubs. The institutions have their balls in a vice and squeezing them hard.
The pubs aren't valued on the bricks and mortar, instead they are valued on a factor of EBITDA!!
Back in the day, an asset was valued at the lower of cost or net realisable value.
If you look at the recent disposals, they incurred a significant capital write off, because the EBIDA was significantly higher than resale value, even as a going concern.
Apply a similar factor to the rest of the estate and yoy are in the deep doodoo.
They expect to spend £80m capex in 2020 and that is just on existing outlets, and no additions. How much of that is revenue expense that is capitalised?

Build a new pub for say £2m. As soon as it commences trading, revalue it to £4m. After 5 years, you have to spend £1m to refurbish it, so that it stays fresh for the punters. Look at the number of new pubs they have built in the last several years that are now requiring major refurb spends. Work out the cost.

They aren't likely to cover the full dividend, out of free cash flow, in the next 5 years. They are only going to pay down debt by selling assets.

PS. They have reassessed the executive remuneration plan for the next 3 years. Apparently it is done every 3 years.
When questioned, they had to admit that the new targets are softer than current ones and that they would have received greater remuneration, over the last 3 years, had that policy been in operation. "It is important to properly incentivise and reward directors for their efforts".

[davr0s] 24/1/2020 18:01

MARS goes through the same nonsense every time it reports. Price falls, lots of people post bearish posts/ and why they sold out a few days ago and then it grinds back higher. Uptrend still intact for my style so I keep holding

[my retirement fund] 24/1/2020 18:00

1.6bln of debt and coming out to say what a shocker the minimum wage increases has been. Jeez that increase is something they've known full well about for a couple years now. I'm mean REALLY !! The story I've read seems quite stinky

[3dwd] 24/1/2020 17:55

I think they are a strong buy at this price... around 110 ...the company has a high quality estate and their craft Beers are doing well ..there are not many quoted pubcos in the UK ..( of this size)... enterprise inns ..gone .. Greene king gone ... punch tavern gone ...the company is vulnerable ... And whilst you wait ...you have a 7%. Yield .. the UK economy is ok and disposals are easier now we have a clear political situation...so I like them ..

[careful] 24/1/2020 16:01

Current fad is to order food on smartphone for delivery at home.
I wonder if the pub and food model is outdated.

Prospects going forward will depend upon the state of the uk economy post Brexit.

[spacecake] 24/1/2020 11:45

Googling Marstons this comes up high in the search ...


Looks like a bailiff advice site !!!

[spacecake] 24/1/2020 11:13

There is little to write about here, poor customer engagement, whining about none existent weather and the fact that subsistence level staff wages are going up. The board should be writing their own resignations after that so called update. Boardroom arrogance.

[skinny] 24/1/2020 10:37

I'll continue to hold as I have done for the last 9 years.

[wish i wasnt in rbs] 24/1/2020 10:19

cc2014 agreed - established cash cow business - repaying the debt fuelled expansion. Marston's debt is/was about £1.4bn, and they've got 1400 pubs. Says all you need to know.

[cc2014] 24/1/2020 09:26

The dividend is safe and getting safer as the debt pile reduces. Interest rates likely moving down a quarter of percent in the next 3 months will assist too.

Real wage rises in execess of inflation will help too, but the issue for me is that we have high employment, real wage rises yet the volume of beer being drunk is falling that's potentially a long term change in behaviour due health or whatever other reasons.

I appreciate people will drink soft drinks instead of beer and margins on soft drinks are better but people don't drink 10 cokes instead of 10 pints.

What we have is an established business which should be a cash cow enabling it to evolve and pay decent dividends. Only it's got too much debt and can't evolve fast until it's paid down more debt. MARS is a decent business but there are headwinds it can't control. Changing social attitudes, minimum wage, sugar tax.


I've decided to sit on the sidelines. FTSE is 7600. It could go higher or it could go lower. I have no idea. I like to buy when FTSE is low. I don't consider 7600 low.

[pubs advisory service] 24/1/2020 09:20

Assess the impact of a pub investment, apply the correct sediment and wastage as directed by regulations to a typical 200 BB pub and there is a £10k drop in revenue. hxxps://www.72pints.co.uk/200-brewers-barrels-example

The CEO of the biggest single issue consumer group in the UK CAMRA said this a couple of weeks ago:
hxxps://camra.org.uk/press_release/camra-comment-on-the-pubs-code-adjudicators-ruling-on-sediment-allowances-for-cask-beer-2/

How much is MARS's exposure to the above, i cannot attend today but someone who is can always ask the question.

[casino444] 24/1/2020 09:20

you said it all ,it could be a take over target if you can get it for a good price

[redartbmud] 24/1/2020 09:17

casino

Yea. Take over £1.4 billions of debt, an overvalued estate, declining profits, insufficient free cash flow to cover capex, let alone dividends.

Oops pink elephant just flew past the window.

[cheshire man] 24/1/2020 09:11

Similar thinking to myself cc2014, the yield here is worth having coupled with the discount to food and room with the privilege card but I'm going to have to think about re-entry now too,,,,,,,can the divi be maintained at this level

[meijiman] 24/1/2020 09:09

Plodding sort of company stuck in a 1970s time warp.

[casino444] 24/1/2020 08:56

overseas buyer will take it over , it needs taking to the next level ,when who knows

[cc2014] 24/1/2020 08:43

If your beer market share is going up yet your overall beer sales are falling that's not good.

Subdued trading at the start of the December due to poor weather. I know my memory is getting worse but we've hardly had a frost this year. I'm not sure what Marstons think is poor weather but I'd hate to see the figures with some snow.

I have to say I don't like how the update is written. It feels lazy and lacks detail. For example volumes are slightly behind last year. Well what does slightly mean? It's not like they don't have the figures.

I was planning to buy at 100. Yesterday I didn't think it would ever get there. Hopefully for all holders it won't. On the other hand I'm not sure I want to buy at 100 any longer.

I'm quite happy buying boring companies, collecting the dividends and have them just plod along. I'm going to have to spend some time thinking about MARS now.

[cheshire man] 24/1/2020 08:39

Ex holding of mine not looking to bright this morning, where is it heading ?